Co-operatives UK has responded the Cabinet Office consultation on mission-led businesses by highlighting why co-ops fit into the category.
The consultation, which ran from 9 May to 8 July, gathered views on how the government could support mission-led businesses – defined by the Cabinet Office as fully profit distributing, with a clear binding commitment to a positive social impact and reporting on their mission to stakeholders.
This is an opportunity to get a better understanding of the nature and needs of co-ops
On its website, Co-operatives UK responded: “We know there are many businesses that are fully committed to a range of economic, social and environmental missions, but do not necessarily meet the accepted definition of social enterprise or cannot make use of the ‘regulated social enterprise’ legal forms.
“We particularly think that consumer co-ops and worker co-ops using the co-operative society and company legal forms share the characteristics of mission-led business proposed by the Cabinet Office. This is an opportunity to get a better understanding of the nature and needs of co-ops.”
Co-operatives UK says the review is an opportunity for the government to better understand the co-operative society legal form. But it is concerned that a new concept of mission-led business, which “excludes all social enterprises and many mutuals” could add “damaging confusion”.
It stresses that co-operatives have a “clearly defined” values and principles, and mechanisms which are used to deliver economic, social and environmental outcomes. The response to the consultation also emphasises that, as fully profit-distributing entities, co-ops share the characteristics of mission-led business.
Co-operatives UK argues that businesses need to clearly define their mission, positive social impacts and how they will generate these through their commercial activities, and says good governance, culture and values can help protect against mission drift.
“Further entrenchment could require the consent of multiple stakeholders, such as employees, before articles sensitive to mission are changed or removed,” its response adds.
The organisation identifies the lack of market confidence in mission-led performance as one of the most significant barriers to large corporates adopting the model, and is also concerned about a lack of understanding of co-operative and mission-led business practice in the professional service.
It warned that the government’s effort to maintain an enabling legal framework for business tends to focus exclusively on companies while the society legal forms are “too often overlooked, neglected and misunderstood”.
“We are convinced that co-operative identity has a significant role to play here,” it adds. “Co-operatives UK is the body empowered by the International Co-operative Alliance to recognise co-operatives in the UK. We administer an identification policy interpreting the UN-recognised ‘International Statement on the Co-operative Identity’.
“This sets out the fundamental of co-operative purpose, and key practices in relation to governance, capital and behaviour. Only recognised co-operatives are able to use the global ‘Co-operative Marque’ and the ‘.coop’ internet domain.”
It made some suggestions for how the Cabinet Office could help mission-led and co-operative businesses – with interventions such as start-up loans assisting in development, and certification systems such as B Corps allowing mission-led businesses to engage with external stakeholders.
In terms of tax relief, Co-operatives UK warns that tax-efficiency should not be motivation to create a mission-led business. It says: “Cabinet Office and HM Treasury could perhaps explore a tax relief on profits reinvested in mission-led businesses, rather than attaching support to capital in the process of being extracted from the business.
“A relief available to smaller businesses that rely more on internal reinvestment to grow may be most appropriate.”